In the history of direct marketing there have been few innovations as significant as the convergence between direct mail and the efficiencies provided by the Internet. The Net affords direct marketers the opportunity to gather stronger buyer information and to fulfill on offers at lower cost.
The Net will never replace traditional direct response media, but it is quickly redefining the content and focus of these media. When the Internet came into the mainstream five years ago, savvy direct marketers began to take advantage of its ubiquity and its ability to provide significant cost savings when used as part of the marketing mix. Before the Internet, direct mail recipients were essentially limited to three forms of response: phone, reply card or fax. Recipients often were restricted in terms of when they could reply. However, with the widespread use of the Internet, direct mail recipients are now able to respond immediately to offers any time and from anywhere resulting in higher response rates and lower costs per lead.
But the Internet is influencing direct mail programs in ways beyond just providing the ability to list a URL. With the widespread availability of CD-ROM drives in PCs and the dramatic lowering of CD-ROM production costs, a new form of mail is available to the direct marketer: digital direct mail.
Digital direct mail's roots are in CD-ROM-based direct mail distributed by companies like America Online, which uses this form of direct marketing to encourage people to sign up for online services.
Digital direct mail involves developing CD-ROM content in HTML. The content is then encrypted using simple technology that doesn't require any installation of software on the personal computer. The CD is then inserted into a direct mailer and distributed.
When the prospect or customer receives the mail, he inserts the CD-ROM, which launches his Web browser. To access the CD-ROM content, he can either call a toll-free number or submit a form over the Internet to receive an unlock code. He types in the code and gets instant access to the content. Companies that use this form of direct marketing receive the response transaction in the form of a qualified sales lead or a direct sale, while achieving instant self-fulfillment. There is no need to send anything to the prospect later because he receives the offer in the mail.
With digital direct mail, there are two crucial questions: First, will the format achieve enough incremental response over traditional direct mail to justify the additional cost of inserting a CD-ROM? And second, what do you put on the CD-ROM?
When we analyze response assumptions necessary to justify this new format, we find that we need to achieve approximately 20 percent to 60 percent higher response to hit the same cost per response as traditional direct mail.
The second question is the most important one — what to put on the CD-ROM. If there's nothing of interest on the CD, then it doesn't matter how inexpensive a CD is. The campaign will fail.
An easy approach to determining CD-ROM content is to deliver information that has high perceived value. But this type of information should take full advantage of what a CD-ROM can do. CD-ROMs provide up to 690 MB of information and can accommodate text, images, audio, video, software applications and more.
By developing significant content on a CD in HTML, rather than delivering it through a Web site, you achieve two key advantages.
First, you transform the perception of your direct mail. A piece of direct mail with a CD-ROM is much harder to ignore than traditional direct mail. Also, the CD-ROM will have higher perceived value than a Web site because its content is immediate and easy to view.
Second, you can deliver very media-rich content on the CD without worrying about connection speeds or other bandwidth issues. Access to information is instant because the personal computer is reading the information off the disk, not the Internet. The user's experience can be far stronger than it is with a Web site, yet you can develop the content using the very same cost-efficient technologies. For time-sensitive information, these HTML CD-ROMs can easily contain links into the Internet.
Whether your offer is on the Internet or on the HTML CD-ROM, this convergence of direct mail and the Internet opens up a new class of offers to the direct marketer — the database-driven software application. Applications allow prospects or customers to interact with information and arrive at answers that are uniquely relevant to them.
For example, if an organization sells home loans, an application that calculates payment plans based on a prospect's exact requirements would be very useful. This type of offer goes far beyond traditional direct response offers. It uses technology as a means of creating a much higher perception of value. While the effort and cost required for developing this type of offer is greater than traditional offers, the increase in response rates should deliver a lower overall cost-per-response.
Making the move to digital direct mail is a big step, but you can rely on a direct marketing adage to help justify a test for your organization — any piece of mail you receive three times must be working well. How many AOL CDs have you received, just in the past month?
Chris Peterson is president of FusionDM, San Francisco, (formerly Times Direct Marketing) a full-service direct response agency that integrates the Internet into all response media (www.fusiondm.com).